Tianjin launches China's latest carbon market

TIANJIN/BEIJING | By Kathy Chen and Stian Reklev

TIANJIN/BEIJING Dec 26 The Chinese city of
Tianjin on Thursday launched the country's fifth emissions
trading scheme as the world's biggest-emitting nation took
another step towards reining in its impact on the environment.

The newest of China's carbon markets caps CO2 emissions from
iron and steel producers, chemical facilities, power and heat
generators, and oil and gas exploitation.

Five initial trades at 26 and 28 yuan ($4.28 and $4.61) for
a total of 45,000 permits were announced by the government at
Thursday's opening ceremony.

Power companies Hanergy and Huaneng Carbon Assets
Management, oil and gas firm PetroChina Co Ltd and
trading house Citic Securities were among the buyers
in the first transactions, according to the local government.

The opening trades put Tianjin's initial carbon price at the
low-end of other Chinese markets.

The central government aims to cut greenhouse gas emissions
per unit of GDP to 40-45 percent below 2005 levels by the end of
this decade, and has said it wants to use carbon trading as its
key tool to achieve that market.

The Tianjin scheme, launched hot on the heels of similar
markets in Shenzhen, Shanghai, Beijing and Guangdong province,
will make 114 of the city's top emitters pay for each tonne of
CO2 they emit beyond a cap they have been given by the
government.

Sun Zhenqing at the Tianjin University of Science and
Technology, one of the chief designers of the scheme, told
Reuters that 160 million permits would be issued each year, with
15 percent of those set aside for new entrants or in reserves in
case the government wants to adjust supply.

But in Tianjin, Sun said, in cases where a supplier and a
consumer of a tonne of CO2 are both covered by the scheme they
would both have to hand over permits to the government for it,
leaving the amount of emissions covered by the Tianjin market
unclear.

The city's Development and Reform Commission (DRC) would not
comment on the size of the cap or how it was calculated.

However, the sectors brought into the scheme emit around 41
million tonnes of CO2 per year, suggesting that there could be a
surplus of permits available.